Trump’s Second Trade War: A New Global Shake-Up

Simran Sethi, 6 March 2025

"The first trade war aimed to curb China’s dominance but reshaped global trade. Now, with Trump’s return, the countries that benefited—Vietnam, Mexico, and Canada—are in the crosshairs, and the disruption could be bigger."

While China’s direct exports to the U.S. declined from the first trade war in 2018-19, other trade routes adapted, 

📉 China’s share of U.S. trade fell from 15.7% (2018) to 10.9% (2024)

📉 U.S. share in China’s trade dropped from 13.7% to 11.2%

📈 Vietnam and Mexico’s contribution to US trade deficit increased by ard. USD 100bn each

But that workaround is now under scrutiny, and April 1 will be a pivotal moment. The next wave of trade policies could impact:

- Vietnam and Mexico – Their economies rely heavily on U.S. exports and could suffer if targeted. "China +1" strategy by shifting to Vietnam or Mexico may soon face similar barriers.

- Canada and Mexico – Now at risk of new tariffs tied to immigration and fentanyl policies, not just trade imbalances. 

China has adapted its trade strategy, reducing reliance on U.S. trade and is less vulnerable than in 2018, shifting its focus to:

- Increased self-reliance by boosting the domestic economy

- Southeast Asia, Russia and the Middle East 

- Strategic technology alliances beyond the West

Which Industries Are Most Exposed?

⚠ Electronics & semiconductors – Key manufacturing hubs in Vietnam & Mexico

⚠ Automobiles – Global car production shifted to Mexico 

⚠ Apparel & consumer goods – Many brands moved production to Vietnam

Despite multiple uncertainties, including the imposition of tariffs themselves, as finance and strategy leaders, we can't just react. 

Start assessing cost-effective, tariff-resistant (somewhat) geographies, engage with new suppliers and evaluate supply chain costs, to be prepared to act swiftly if and when required.

#FinanceLeadership #TradeWar #RiskManagement